By:
Sean Halverson, AIM Student at Marquette University
Disclosure:
The AIM Equity Fund currently holds this position. This article was written by
myself, and it expresses my own opinions. I am not receiving compensation for
it and I have no business relationship with any company whose stock is
mentioned in this article.
Summary
• Vicor Corporation. (NYSE:VICR) is a designer of components and
power systems that are built to convert, regulate, and control electric
currents.
• For the fourth quarter,
bookings are expected to be up 30%.
• Company has seen
margins around 46 and 47% and expects as the tariff issues continue to get
better, management forecasts margin improvement to 50%.
• Even though a small
company, their 48V solution to datacenters are going to prove to be so strong
that customers are going move towards.
• With a need for higher
GPU potential, Vicor is one of the few players that can deliver a product that
can provide supercomputing with a reliable source to enhance performance.
Key
points:
Vicor Corporation is positioned to have a very strong
2020 fiscal year. The company has created a solution for data centers that
allows the ability to move MTMs closer to the processor than traditional power
suppliers. This enables the data center to experience a much greater reduction
in distribution loss of power. The Vicor developments are generating enhanced
performance and a more efficient data center.
In regards to the
automotive industry, the 48V Vicor solution is allowing for autonomous vehicles
to be able to run at a more efficient and higher power level. Additionally, the
48V system is proving to last much longer than the traditional battery supply
in electric vehicles. There have been rumors that Volvo was at their plant to
view the solution and integrate it into their autonomous systems.
The GPU space is moving
rapidly towards a 48V system. Vicor’s 48V system is one that management
recognizes can’t be replicated by any competitor. Moving into 2020, Nvidia was
looking to hire an individual with Vicor background that can come in and help
to implement their findings and expertis. The Vicor solution is still proving
to be very much ahead of its peers with this continued Nvidia exposure.
What
has the stock done lately?
Since the Q3 earnings
release, the stock is up around 26%. The strong release is due to the fact the
company is expecting to have a strong Q4 and a quick start to 2020. Management
expectations in stronger margins is helping with the growth in stock price.
Past
Year Performance:
Over the past year, Vicor has given
shareholders a 27% return. The growth was stunted early in the year because of
tariff issues the company was experiencing. Since then, they have moved away
from China and into Taiwan. This will prove to be a long-term benefit company
and reduce the losses from tariffs the company might experience.
Source:
FactSet
My
Takeaway
Vicor is a true pure play
into the 48V solution being integrated into data centers. The company is still
showing strong signs of serious potential as it moves into 2020. Additionally, the
management team has been dedicated to the technology and is proving that 48V
data centers are the future. Supercomputing is going to become more advanced
with their product and is a driver behind the company’s current momentum.
Source:
FactSet
